if the interest rate is 10%, what is the present value of $50,000/year forever, starting 21...

Question

Question

if the interest rate is 10%, what is the present value of $50,000/year forever, starting 21 years from now?

Hint: The PV value of $1 to be paid in 20 yrs is 1/(1+r)^20 = 0.15

business economics

Answer 1

Answer #1

Answer

The present value of deferred forever series formula is

PV=present value =74321.814

A=annual forever payment =50000

n= deferred period =20

i=interest rate =10%=0.1

Answer 2

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